Japan’s bond market is imploding. The Bank of Japan spent $60 billion in just two weeks - matching its total outlay from May to June 2024 - to defend the yen, with minimal effect. Each intervention now retraces within days. The currency is trapped in a feedback loop: a weaker yen spikes dollar-denominated energy costs, forcing more yen sales to buy oil, further devaluing the currency.
On TFTC, Peruvian Bull laid out the full rot. Japan, the world’s largest creditor and holder of $1.2 trillion in U.S. Treasuries, is running out of bullets. With a debt-to-GDP ratio at 260% and zombie corporations propped up by cheap credit, rate hikes are impossible. The interventions are pebbles thrown at a forest fire.
"The Treasury may start lending its own cash against its own debt. It’s the snake eating its own tail."
- Marty Bent, TFTC
The U.S. is following the same script. Foreign buyers now fund only 14% of new Treasury issuance, down from 70% between 2008 and 2015. Interest payments have ballooned to $1.27 trillion annually - more than double since 2019 - and are on track to become the largest federal expense. The Fed no longer leads; it follows the bond market’s lead.
Peruvian Bull argues stablecoins won’t save the system. Even $4 trillion in projected demand is a rounding error against a $70 trillion Treasury market. Instead, the state will force monetization through backdoors: adjusting bank capital rules, pressuring money market funds, or mandating CBDC-like instruments. The goal is stealth QE - funding deficits without expanding central bank balance sheets.
"When the U.S. can freeze a stablecoin, adversarial states have only one exit: Bitcoin."
- Marty Bent, TFTC
That exit is already in motion. Iran’s IRGC is reportedly demanding Bitcoin payments for its 'Hormuz Safe' shipping insurance, a direct response to OFAC’s freeze of $344 million in Tether assets. Bitcoin is no longer speculative - it’s operational money for enemies. The same network that resists censorship is now insulating critical trade flows from financial warfare.
The real crisis isn’t inflation. It’s trust. AI has driven software’s marginal cost to zero, collapsing moats built on code. The new competitive edge lies in physical infrastructure and human credibility. As digital slop floods the internet, value shifts to atoms, not bits - and to assets that cannot be turned off.
